NEW DELHI: The announcement by Finance Minister Nirmala Sitharaman of a Rs 1,500-crore fund to hasten the expansion of India’s digital payments industry is being viewed as reparation for the waiver of merchant discount rates on UPI and RuPay in her previous budget.

The payments industry, which is waiting for the fine print on deployment of the earmarked funds, expects there will be a target-based subsidy for firms deploying acceptance infrastructure in tier-3 towns and beyond.

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“Hopefully, this (budgetary fund) will be used to reimburse losses suffered by payment service providers for processing RuPay debit cards and UPI transactions for free in the year 2020,” said Vishwas Patel, who is the chairman of Payments Council of India (PCI).

The fund announcement comes in the wake of the central bank’s recent launch of the Rs 345-crore Infrastructure Development Fund to promote digital payments in rural India. Patel said that both funds can work in tandem to boost the country’s payment infrastructure.

“I am fairly sure the Rs 1,500-crore fund will be used to support digital transaction acquirers,” said Amrish Rau, CEO of Pine Labs. “This will help fintech companies make digital payments ubiquitous, while also not adding pressure to retailers who are trying to get consumers back in the stores.” India’s digital payments sector has grown “manifold” over the last few years, Sitharaman said. NPCI’s UPI channel has recorded an annual growth rate of 414% since its inception in 2016 with over 200 million active users.

“An increase in digital payments not only favours economic growth but is also a step towards formalisation of the economy,” said Paytm founder Vijay Shekhar Sharma.

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